Saturday, 28 March 2020

US$1.0bn needed to put Ghana economy in shape - Mould

-
March 28, 2020

Adnan Adams Mohammed

Standard Chartered Bank former Executive Director, Alex K.
Mould has indicated that, the country needs not less than US$1.0 billion to
hold the economy in shape amidst the devastating impact of the global pandemic,
COVID-19.

He said, there is a very short window of opportunity now if the
government is to creatively manage this public health crisis while concurrently
reducing its impact on the economy, and plan for a quick bounce back.

President Nana Akufo-Addo in his address to unionised groups,
last week, stated that government was not considering a lockdown currently
because of the implications, it will have on many people and the economy at
large.

“If you lockdown Accra, what are the consequences? If we
lockdown the country, what are the consequences? A responsible government is
required to look at all this before decisions are made and that is the exercise
on which we are currently engaged”, the president said when he met members of
the Ghana Union of Traders Association (GUTA) leadership.

But, Mr Mould noted the President was fully aware of the dire
consequence lockdown will impact the economy that is he is being careful
declaring a lockdown.

"I will reiterate that we have to learn fast from other
countries handling COVID-19 andadapt
what has worked to slow down the its spread to suit our environment in
Ghana", the former GNPC Boss stated in article shared with the public.

There is a very short window of opportunity now if we are to
creatively manage this public health crisis while concurrently reducing its
impact on the economy, and plan for a quick bounce back.

I will reiterate that we have to learn fast from other
countries handling COVID-19 andadapt
what has worked to slow down the its spread to suit our environment in Ghana.

We are told President Nana Akufo-Addo stated government was not
considering a lockdown currently because of the implications it will have on
many people and the economy at large.

But why not?

Well, his stance was attributed to a meeting he had with the
leadership of the Trade Union Congress in Accra yesterday.

And he has been quoted to have argued “If you lockdown Accra,
what are the consequences? If we lockdown the country, what are the
consequences? A responsible government is required to look at all this before
decisions are made and that is the exercise on which we are currently
engaged."

The above comment indicates that the President is fully aware
of the implications of both mitigation and suppression strategies in addressing
the COVID-19GH; yet he has chosen the mitigation route for reasons only known
to him!

Watching as things have unfolded in more affected countries and
the daily increase in the number of those affected in Ghana, many of us have
pushed for a mandatory lockdown alongside current recommendations by the
authorities. Especially, considering the fact that our healthcare system is not
advanced enough to accommodate massive numbers of infected cases; all the while
continuing to meet the health needs of the Ghanaian populace.

There is no doubt that our hospitals will certainly be
overwhelmed and medical practitioners will be unable to cope.

A lockdown will in effect slow down the spread of the virus
i.e. reduce the number of people each confirmed case infects and subsequent
mortality rates; as well as ultimately avert a crisis.

To do this, the question has been – Do we as a nation have the
ability to successfully exist in a lockdown and manage the economic,
operational, and even psychological impact of such a measure? Can our
infrastructure, economy, and general way of life manage the restrictive
measures we have seen play out around the world?

Economically, we are already seeing a gradual slow down as more
people take time off work, reduce their daily spending, and children remain
home from school. This reality may be masked by the quick surge in panic buying
and stocking up we experienced in the past weeks as Ghanaians braced for the
full impact of COVID-19; but the economic impact will start to be more apparent
as things level off, and people stay home with increased cases.

The current strategy of managing the crisis in Ghana will very
likely lead to an emergency lockdown – causing the impact on our economy to be
even more disruptively abrupt than in other nations with higher usage rates of
e-commerce and more advanced supply chain channels for existence. Should the
economy shut down suddenly, small businesses will experience challenges in
avoiding payment defaults on bank loans and overdraft payments, paying
salaries, an increase in non-performing loans will be observed in the banking
sector, a plunge in consumer spending - which powers a bulk of our economy, and
we can expect abysmally performance of the stock market.

Success in managing the economy during this time will be
measured on how many SMEs and even large corporations avoid going under in
Ghana and more importantly, how many Ghanaians will have jobs to return to
eventually?

There are great opportunities to harness, and if executed
effectively, will ensure a robust recovery with positive effects post-COVID-19.
To do this, government will have to quickly decide on spending relative to our
GDP and available funding - Ghana’s economy is a $60Bn economy (unlike the US’s
$22Tn) may result in a spend of about US$1bn which is about 1.5% of our GDP.
The spending government puts in place has a main function of preserving the
economy’s ability to bounce back, while fighting the virus and supporting our
healthcare frontline. Bank of Ghana will also need to cut interest rates to
unprecedented levels and cannot avoid an intervention with the full power of
its balance sheets to maintain our functional credit mark. Banks will have to
freeze repayment of interest and principal on loans.

Overall we expect to see the creative engagement of activities
such as:

·Employ the use
of the Buffer Stock Company, as well as other privately owned silos and
warehouses, to enhance storage and supply (Fund farmers and agriculture
landscape to buy and store feed, produce, and essentials in these storage
facilities)

·Plan exportation-industry strategy
post-Covid19 – as the global economy awakens and demand begins to rise, Ghana
should be able to respond

·Ensure we have
a robust economic preservation package to raise the probability for businesses
and employees to survive and tide-over the near-term from our already slowly
hibernating economy

We are certain that the economy cannot be revived until this
public health issue is resolved. Emergent and mandatory shutdowns are
unavoidable now as the opportunity to control the Covid-19 outbreak has been
lost in Ghana.

We therefore have to handle this challenge promptly and
creatively, so that we not only protect and save Ghanaians lives, but also
ensure our economy is able to withstand and bounce back quickly in support of
the Ghanaian people.